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A child’s age at school entry matters, and the
implications of policy changes can have long-lasting effects

Laws on age at school entry affect student
achievement and often change for a number of reasons. Older students are
more mature and ready to learn. This can have positive impacts on academic,
employment, and earnings outcomes. The costs of holding children back
include another year of childcare expenses or income forgone by the
caregiver parent. Entering the workforce one year later also has
implications for lifetime earnings and remittances to governments.
School-entry policies could be a useful tool in increasing student
achievement, but the short- and long-term impacts need to be better
understood.

Developing countries often face two well-known
structural problems: high youth unemployment and high inequality. In recent
decades, policymakers have increased the share of government spending on
education in developing countries to address both of these issues. The
empirical literature offers mixed results on which type of education is most
suitable to improve gainful employment and reduce inequality: is it primary,
secondary, or tertiary education? Investigating recent literature on the
returns to education in selected developing countries in Africa can help to
answer this question.

Education benefits individuals, but the societal benefits are
likely even greater

Formal schooling increases earnings and provides other
individual benefits. However, societal benefits of education may exceed individual benefits.
Research finds that higher average education levels in an area are correlated with higher
earnings, even for local residents with minimal education. Science, technology, engineering,
and mathematics (STEM) graduates appear to generate especially strong external effects, due to
their role in stimulating innovation and economic growth. Several strategies to test for
causality find human capital externalities do exist.

Policymakers in many OECD countries are
increasingly concerned about high and rising inequality. Much of the
evidence (as far back as Adam Smith’s ) points to the importance of skills in tackling wage
inequality. Yet a recent strand of the research argues that (cognitive)
skills explain little of the cross-country differences in wage inequality.
Does this challenge the received wisdom on the relationship between skills
and wage inequality? No, because this recent research fails to account for
the fact that the price of skill (and thus wage inequality) is determined to
a large extent by the match of skill supply and demand.

The relationship is more complex than one may
think

The negative correlation between women’s
education and fertility is strongly observed across regions and time;
however, its interpretation is unclear. Women’s education level could affect
fertility through its impact on women’s health and their physical capacity
to give birth, children’s health, the number of children desired, and
women’s ability to control birth and knowledge of different birth control
methods. Each of these mechanisms depends on the individual, institutional,
and country circumstances experienced. Their relative importance may change
along a country’s economic development process.

Politicians typically focus on short-term
economic issues; but, a nation’s long-term economic well-being is directly
linked to its rate of economic growth. In turn, its growth rate is directly
linked to the economically relevant skills of its population. Until
recently, however, economists have found it hard to confirm this through
empirical analysis because of difficulties in measuring the skills of
different societies. International tests of mathematics and science
achievement now offer reliable measures of a population’s relevant cognitive
skills.

Universal completion of secondary education by
2030 is among the targets set by the United Nations’ Sustainable Development
Goals. Higher expected adult wages traced to schooling may play a major role
in reaching this target as they are predicted to induce increased school
enrollment for children whose families wish to optimally invest in their
children’s future. However, low incomes and the obligation to meet immediate
needs may forestall such investment. Studies suggest that school enrollment
in developing countries is positively correlated with higher expected future
wages, but poor families continue to under-enroll their children.

Changes in compulsory schooling laws have
significant effects on certain population groups, but are costly to
implement

Compulsory schooling laws are a common policy
tool to achieve greater participation in education, particularly from
marginalized groups. Raising the compulsory schooling requirement forces
students to remain in school which, on balance, is good for them in terms of
labor market outcomes such as earnings. But the usefulness of this approach
rests with how the laws affect the distribution of years of schooling, and
the wider benefits of the increase in schooling. There is also evidence that
such a policy has an intergenerational impact, which can help address
persistence in poverty across generations.

Better educated parents invest more time and
money in their children, who are more successful in the labor market

Governments invest a lot of money in education,
so it is important to understand the benefits of this spending. One
essential aspect is that education can potentially make people better
parents and thus improve the educational and employment outcomes of their
children. Interventions that encourage the educational attainment of
children from poorer families will reduce inequality in current and future
generations. In addition to purely formal education, much less expensive
interventions to improve parenting skills, such as parental involvement
programs in schools, may also improve child development.